Updated October 16, 2026. Quick answer: Form 3520 is the “Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts”. “A separate Form 3520 must be filed for transactions with each foreign trust.” For gifts, the first trigger in Part IV is receiving “More than $100,000 from a nonresident alien individual or a foreign estate”, measured with the instructions’ related-donor rule. The decision that matters first is which of the four parts of the form applies to the money or the trust involved.
More IRS forms and schedules, read line by line: Form 2350 extension for filers abroad.
Form lines read one part at a time: Form 3520 Part I, Form 3520 Part II and Form 3520 Part III.
S corporation return (Form 1120-S) for 2025, read line by line: Form 1120-S Schedule K lines 14 to 16.
Partnership return (Form 1065) for 2025, read line by line: Form 1065 Schedule B questions 7 to 12.
Schedule A and Schedule B (Form 1040) for 2025, read line by line: Schedule B line 7 and Schedule B line 8.
Schedule 2 (Form 1040) for 2025, read line by line: Schedule 2 lines 17l to 17q.
More IRS forms and schedules, read line by line: Form W-7 instructions.
What Form 3520 reports
“U.S. persons (and executors of estates of U.S. decedents) file Form 3520 with the IRS to report:”
| Item | As printed in the instructions |
|---|---|
| 1 | “Certain transactions with foreign trusts,” |
| 2 | “Ownership of foreign trusts under the rules of sections 671 through 679, and” |
| 3 | “Receipt of certain large gifts or bequests from certain foreign persons.” |
The form is built in four parts, and each part answers a different question about the filer:
| Part | Heading as printed on the form |
|---|---|
| Part I | “Transfers by U.S. Persons to a Foreign Trust During the Current Tax Year” |
| Part II | “U.S. Owner of a Foreign Trust” |
| Part III | “Distributions to a U.S. Person From a Foreign Trust During the Current Tax Year” |
| Part IV | “U.S. Recipients of Gifts or Bequests Received During the Current Tax Year From Foreign Persons” |
Anyone weighing a large inheritance from abroad can read the plain-language walkthrough at the foreign inheritance and Form 3520 page.
Key numbers at a glance
The gift threshold, the penalty floor and the monthly gift penalty are collected here.
| Item | As printed |
|---|---|
| Gift threshold, nonresident alien or foreign estate | “More than $100,000 from a nonresident alien individual or a foreign estate” |
| Initial penalty floor | “the initial penalty is equal to the greater of $10,000 or the following (as applicable).” |
| Late gift reporting | “5% of the amount of such foreign gifts applies for each month for which the failure to report continues (not to exceed a total of 25%)” |
Who must file
“File Form 3520 if any one or more of the following apply.” The instructions then list four situations, one for each part of the form. In summary, the first covers a responsible party for a reportable event, the second a U.S. person treated as owner of a foreign trust, the third a U.S. person who received a distribution, loan or use of trust property, and the fourth a U.S. person who received certain foreign gifts or bequests. The instructions tell the filer what to complete in each case:
| Part | What the instructions tell the filer to complete |
|---|---|
| Part I | “Complete the identifying information on page 1 of the form and the relevant portions of Part I.” |
| Part II | “Complete the identifying information on page 1 of the form and Part II.” |
| Part III | “Complete the identifying information on page 1 of the form and Part III.” |
| Part IV | “Complete the identifying information on page 1 of the form and Part IV.” |
Ownership alone triggers a filing. The instructions note: “You are required to complete Part II even if there have been no transactions involving the trust during the tax year.”
Spouses have an option only if they are filing a joint income tax return for the year and are both transferors, grantors, or beneficiaries of the same foreign trust: “then you may file a joint Form 3520 for the same tax year.” The instructions also point the reader to other foreign-asset reports: “You may be required to file Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (FBAR).” “In addition, you may be required to file Form 8938, Statement of Specified Foreign Financial Assets.” The difference between those two reports is laid out at the FBAR and Form 8938 comparison.
Foreign gifts and bequests: Part IV
The gift test has two prongs. The first is the nonresident alien or foreign estate prong: “More than $100,000 from a nonresident alien individual or a foreign estate (including foreign persons related to that nonresident alien individual or foreign estate) that you treated as gifts or bequests; or”
The second prong covers foreign companies: “More than the section 6039F threshold amount from foreign corporations or foreign partnerships (including foreign persons related to such foreign corporations or foreign partnerships) that you treated as gifts.” “The threshold amount is available at IRS.gov/InflationAdjustment.”
Related donors are added together: “you must aggregate gifts from different foreign nonresident aliens and foreign estates if you know, or have reason to know, that those persons are related to each other or if one is acting as a nominee or intermediary for the other.” As a computed illustration, not an IRS example, two related nonresident aliens give $60,000 and $50,000 in the same year, and the computed amount is $110,000 which is more than $100,000.
Detail is required for larger single gifts: “complete columns (a) through (c) with respect to each such gift or bequest in excess of $5,000”.
Some amounts are not gifts for this purpose: “A gift to a U.S. person does not include any amount paid for qualified tuition or medical payments made on behalf of the U.S. person.” And a trust payment goes in a different part: “If a foreign trust makes a distribution to a U.S. person, the U.S. person must report the amount as a distribution in Part III, rather than as a gift in Part IV.”
The instructions open with a new item: “New guidance regarding the section 2801 tax.” “Section 2801 imposes a tax on U.S. citizens and residents who receive gifts or bequests from covered expatriates.” Part IV also carries a pointer: “If you received a gift or bequest from a covered expatriate, you may have to file Form 708.”
Foreign trusts: Parts I, II and III
Part II is the ownership part. On line 23 the form asks the filer to “Enter the gross value of the portion of the foreign trust that you are treated as owning at the end of your tax year”. The instructions add a shortcut for owners who also receive money: “the U.S. owner must only complete lines 24 and 27 in Part III.”
Part III is the distribution part, and the instructions define a distribution broadly: “A distribution also includes constructive transfers from a foreign trust.” “if you write checks on a foreign trust’s bank account, the amount will be treated as a distribution.”
When the trust does not supply a beneficiary statement, the form falls back to a default calculation. Its steps include “Multiply line 33 by 1.25” on line 34 and “Subtract line 36 from line 31.” on line 37, and the interest charge result goes to the return: “Report this amount as additional tax (ADT) on the appropriate line of your income tax return.”
Part I is the transfer part. The instructions describe the common starting point: “Any transfer in exchange for an obligation (whether or not a qualified obligation) must be reported under section 6048(a).” Whether a loan counts as a qualified obligation depends on a list of six conditions in the instructions’ definitions section.
Several transactions are excused from filing. A selection of the exceptions as printed:
| Exception | As printed in the instructions |
|---|---|
| Fair market value transfers | “Most fair market value (FMV) transfers by a U.S. person to a foreign trust.” |
| Charities | “Transfers to foreign trusts that have a current determination letter from the IRS recognizing their status as exempt from income taxation under section 501(c)(3).” |
| Canadian plans | “Transfers to, ownership of, and distributions from a Canadian registered retirement savings plan (RRSP)” |
| Compensation | “Distributions from foreign trusts that are taxable as compensation for services rendered (within the meaning of section 672(f)(2)(B) and its regulations), so long as the recipient reports the distribution as compensation income on its applicable federal income tax return.” |
The instructions also limit what an exception does: “The exemptions from foreign trust information reporting described in Rev. Proc. 2014-55, Rev. Proc. 2020-17, and the proposed regulations under section 6048 do not affect any other reporting obligations.”
Due date, extensions and where to send it
“In general, a U.S person’s Form 3520 is due on the 15th day of the 4th month following the end of such person’s tax year for income tax purposes.” “If a U.S. person is granted an extension of time to file an income tax return, Form 3520 is due no later than the 15th day of the 10th month following the end of the U.S. person’s tax year.”
The instructions also warn that the dates are not locked to the income tax return: “This may differ from and is not tied to the due date of the U.S. person’s income tax return.”
Individual U.S. citizens or residents get longer if, on the due date of their income tax return, they live outside the United States and Puerto Rico and their place of business or post of duty is outside the United States and Puerto Rico, or they are in military or naval service on duty outside the United States and Puerto Rico: “the due date for filing Form 3520 is extended from the 15th day of the 4th month (April 15) to the 15th day of the 6th month (June 15) following the end of your tax year.” “You must include a statement with Form 3520 showing that you are a U.S. citizen or resident who meets one of these conditions.”
A filing is only timely when whole: “Only a complete Form 3520 is considered timely filed.” “Form 3520 is considered complete only if all required attachments are included.”
An incomplete filing also leaves the IRS clock open: “the time for assessment of any tax imposed with respect to any event or period to which the information required to be reported in Parts I through III of such Form 3520 relates will not expire before the date that is 3 years after the date on which the required information is reported.”
Penalties and reasonable cause
“A penalty applies if Form 3520 is not timely filed or if the information is incomplete or incorrect.” “the initial penalty is equal to the greater of $10,000 or the following (as applicable).”
| Failure | Initial penalty measure, as printed |
|---|---|
| Part I failure | “35% of the gross value of any property transferred to a foreign trust for failure by a U.S. transferor to report the creation of or transfer to a foreign trust in Part I.” |
| Part III failure | “35% of the gross value of the distributions received from a foreign trust for failure by a U.S. person to report receipt of the distribution in Part III.” |
| Grantor trust ownership | “5% of the gross value of the portion of the foreign trust’s assets treated as owned by a U.S. person under the grantor trust rules (sections 671 through 679), if the foreign trust (a) fails to file a timely Form 3520-A and furnish the required annual statements to its U.S. owners and U.S. beneficiaries; or (b) does not furnish all of the information required by section 6048(b) or includes incorrect information.” |
As a computed illustration, not an IRS example, a failure to report a transfer of $200,000 to a foreign trust is measured by 35% of $200,000 and the computed amount is $70,000 which is more than $10,000 so the 35% measure is the larger of the two.
Continued silence adds more: “Additional penalties will be imposed if the noncompliance continues for more than 90 days after the IRS mails a notice of failure to comply with the required reporting.”
Gifts have their own penalty: “a penalty equal to 5% of the amount of such foreign gifts applies for each month for which the failure to report continues (not to exceed a total of 25%).”
A defense is available: “No penalties will be imposed if the taxpayer can demonstrate that the failure to comply was due to reasonable cause and not willful neglect.” But local secrecy rules do not qualify: “The fact that a foreign country would impose penalties for disclosing the required information is not reasonable cause.”
Which revision applies
The edition read for this page is Form 3520 (Rev. December 2023) and the Instructions for Form 3520 (Rev. December 2025, for use with the December 2023 revision of the form), which are the revisions irs.gov served when they were read on 2026-10-16. Check the revision printed on the form you are filing, because a later revision can change the parts, the reporting thresholds and the penalty wording.
Every Form 3520 part page in one table
Each row links to the page that reads a part, section or line group of Form 3520. The right column is the summary each page carries.
| Page | What it covers |
|---|---|
| Form 3520 Part I: Transfers to a Foreign Trust, Line by Line | Form 3520 Part I line by line: who completes it, lines 3 to 10, Schedule B transfers on line 13, and the trust details on lines 15 to 18. |
| Form 3520 Part II: U.S. Owner of a Foreign Trust, Line by Line | Form 3520 Part II line by line: who completes it, line 20 owners, line 22 and Form 3520-A, and the line 23 value of what you are treated as owning. |
| Form 3520 Part III: Distributions From a Foreign Trust | Form 3520 Part III line by line: line 24 distributions, lines 29 and 30 trust statements, the Schedule A to C calculations, and where the tax goes. |
| Form 3520 Part IV: Gifts and Bequests From Foreign Persons | Form 3520 Part IV line by line: the $100,000 gift and bequest question on line 54, line 55 for foreign entities, line 56, and what to attach. |
| Form 3520-A: Foreign Trust With a U.S. Owner, Part I Explained | Form 3520-A explained: what the annual trust return is, who files it, the due date, and Part I general information line by line, plus the statements. |
| Form 3520-A Parts II and III: Income Statement, Balance Sheet | Form 3520-A Parts II and III line by line: the foreign trust income statement, the balance sheet, line 17 distributions, and how they feed Form 3520. |
Common mistakes
- Reading a gift from a foreign trust as a Part IV gift. The instructions say a distribution from a foreign trust to a U.S. person is reported as a distribution in Part III, not as a gift in Part IV.
- Testing each foreign gift alone against the threshold. The instructions say gifts from related nonresident aliens and foreign estates are aggregated when the recipient knows or has reason to know they are related.
- Assuming the Form 3520 due date follows the income tax return extension. The instructions say the date may differ from and is not tied to the income tax return due date, and that only a complete filing, with all required attachments, is timely.
Related: foreign inheritances and Form 3520, FBAR versus Form 8938, Form 926 foreign transfers, non-citizen spouse estate planning, and Form 709 gift tax return.
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Answer againSources
- Form 3520 (Rev. December 2023), Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts: https://www.irs.gov/pub/irs-pdf/f3520.pdf
- Instructions for Form 3520 (Rev. December 2025): https://www.irs.gov/pub/irs-pdf/i3520.pdf
Read from the IRS documents linked above on October 16, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.